Anticipate a Bumpy Ride: Tesla’s 2024 Delivery Expectations May Disappoint

Tesla TSLA

Tesla Inc. (NASDAQ:TSLA) faces a challenging landscape, with indications that it may fall short of its third-quarter delivery and production goals. Yet, the more concerning issue lies in a potential decrease in its 2024 projections, as pointed out by Deutsche Bank analyst Emmanuel Rosner. This is primarily due to constraints in volume growth, perhaps indicating that Tesla’s rapid expansion might be hitting a few speed bumps.

Even with these looming uncertainties, Rosner maintains his ‘buy’ rating on Tesla’s stock. However, he has adjusted his price target downwards from $300 to $285.

Rosner also adjusted the estimated third-quarter deliveries for the electric car manufacturer to 440,000 vehicles, down from the previous projection of 455,000.

The adjustment is attributed to the scheduled downtime at Tesla’s global plants during the summer, a period used to implement upgrades to its Model 3 electric vehicles. Interestingly, this new estimate falls below the FactSet consensus, which had predicted deliveries of 462,000 vehicles.

“But the larger risk we see is downside to expectations for 2024 on both growth and earnings,” Rosner wrote in a note to clients.

This apprehension stems from Tesla’s recent indications at Deutsche investor meetings. The electric vehicle giant seems to have shelved plans to ramp up production capacity at its Austin, Texas, and Berlin factories to the tune of 10,000 vehicles per week.

Consequently, Rosner anticipates that Tesla will project a delivery target of roughly 2.1 million vehicles for 2024. This figure falls notably short of the current FactSet consensus estimate of 2.3 million vehicles.

Despite these challenges, not all hope is lost. There are still silver linings to be found.

Since the company is not striving to maximize volume output, it could potentially alleviate some pricing pressure in the coming year, Rosner noted.

Price Action

As of Wednesday’s market close, Tesla shares saw a modest increase, trading at $241.11, a rise of 0.60 percent. The stock has enjoyed a robust year-to-date surge of 95%, even though it reflects a decline of over 16% when compared to the previous year.

Reference: MW

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